CSU is still undervalued, RBC says

Its first quarter results are due soon, and RBC analyst Paul Treiber thinks Constellation Software (Constellation Software Stock Quote, Chart, News, Analysts, Financials TSX:CSU) is still undervalued.

As reported by the Globe and Mail, Treiber April 22 maintained his “Outperform” rating and price target of $4300 on CSU.

The analyst thinks the company will show up with another good results, when its first quarter report is released on May 10.

“Constellation’s solid YTD [year-to-date] M&A to sustain the positive investment narrative,” he wrote. “We expect Constellation to report solid Q1 results, with adj. EBITDA up 30 per cent year-over-year, which is slightly faster growth than Constellation’s 5-year average (26 per cent). Our forecast assumes organic growth normalizes to historical averages as Constellation laps CPI-based price increases. YTD M&A has been strong, though reported Q1 capital deployed on acquisitions is likely to be down from Q4 due to the acquisitions of businesses from Nokia and Conduent closing Q2.”

On March 6, CSU reported its Q4, 2023 results. The company posted Net Income of $141.0-million on revenue of $2.32-billion, a topline that was up 6% over the same period last year.